The Delhi High Court has ruled that an order passed by the Arbitrator holding that the arbitral proceedings shall be conducted at any other place, would not change the seat of Arbitration as provided in the Arbitration Clause.
The Single Bench of Justice V. Kameswar Rao held that the Arbitrator cannot decide anything contrary to what has been decided by the parties.
The petitioner M/s Sat Kartar Tour N Travels was awarded a contract by the respondent Oil and Natural Gas Corporation Limited (ONGC) for hiring services. Thereafter, the respondent terminated the contract vide a notice. The petitioner issued a legal notice invoking the Arbitration Clause and called upon the respondent to appoint an Arbitrator.
After the respondent appointed a sole Arbitrator unilaterally without taking any prior consent from the petitioner, the petitioner filed a petition under Section 11(6) of the A&C Act before the Delhi High Court to appoint a sole Arbitrator.
The respondent ONGC submitted before the High Court that its office is situated in Bokaro, Jharkhand, and that the contract was placed and accepted from Bokaro, Jharkhand. The respondent added that the letter terminating the contract was also issued from Bokaro, Jharkhand.
The respondent averred that as per the terms of the contract entered into between the parties, the seat of Arbitration would be at the place from where the contract was placed by the respondent or at the place of the respondent company, as decided by it. Thus, the respondent contended that the Delhi High Court did not have the jurisdiction to entertain the petition.
The petitioner Sat Kartar Tour N Travels submitted that since the respondent ONGC fell under the Ministry of Petroleum and Natural Gas, Government of India, which is based in Delhi, the Delhi High Court would have the jurisdiction to entertain the petition.
The petitioner averred that the Arbitrator, while holding the proceedings in Noida, had passed an order that all meetings of the Arbitral Tribunal would be held at Delhi or at such other place as agreed by the parties. Thus, the petitioner contended that the Delhi High Court had the jurisdiction to hear the petition.
The Court observed that as per the Arbitration Clause embedded in the contract entered into between the parties, the place of arbitration was the place from where the contract was placed by the respondent or at the place of the respondent.
The Court noted that the respondent was based in Bokaro, Jharkhand and thus the concerned High Court, within whose jurisdiction Bokaro fell, was competent to entertain the petition under Section 11(6) of the A&C Act.
The High Court ruled that the place of arbitration has to be decided as per the terms of the contract, which clearly provided that the seat of arbitration was to be the place from where the contract was issued.
The Court observed that as per the law laid down by the Supreme Court in the case of Brahmani River Pellets Ltd. versus Kamachi Industries Ltd (2020), where the contract specifies the jurisdiction of the court, only such court would have the jurisdiction to deal with the matter and that non-use of words like "exclusive jurisdiction" in the Arbitration Clause is not decisive.
The Court ruled that the order passed by the Arbitral Tribunal providing that all the meetings of the Arbitral Tribunal shall be held at Delhi or at such other place as agreed by the parties, was passed for the convenience of the parties. The Court added that the place of arbitration had not been changed from Bokaro, Jharkhand and that the Arbitrator cannot decide anything contrary to what has been decided by the parties.
Thus, the Court held that the petition filed by the petitioner was not maintainable before the Delhi High Court and, therefore, dismissed the petition.
Case Title: M/s Sat Kartar Tour N Travels versus Oil and Natural Gas Corporation Limited
Citation: 2022 LiveLaw (Del) 550
Dated: 25.05.2022 (Delhi High Court)
Counsel for the Petitioner: Mr. Devesh Saxena, Mr. Ashish Garg and Mr. Rajeev Garg, Advocates
Counsel for the Respondent: Mr. Sandeep Sethi, Sr. Advocate with Mr. Varun Mishra, Advocate